JPMorgan Chase and all other big banks should be broken up, says Sheila Bair, former head of the Federal Deposit Insurance Corporation.

Big banks today are hard to manage, as evidenced by JPMorgan's recent $2 billion hedging loss, and they don't add too much value for shareholders anyway.

Breaking them up would benefit all involved and create a more efficient financial services industry, Bair writes in a Fortune column.

"Whatever economies the megabanks achieve from their size are more than offset by the challenges in managing trillion-dollar institutions that are into trading, market making, investment banking, derivatives, and insurance, in addition to the core business of taking deposits and making loans," Bair writes.

"This is one of the reasons why, even before the crisis, their shares performed more poorly than those of the well-managed regional banks, and continue to do so."

Calls for increased regulation and breaking up big banks are on the rise since the JPMorgan trading loss, which the bank's CEO Jamie Dimon has described as an "embarrassment."

"The best way for Dimon to provide a better return to his investors is to recognize that his bank is worth more in smaller, easier-to-manage pieces," Bair writes.

"Let's face it, making a competitive return on equity is going to become even harder for megabanks as their capital requirements go up, their trading and derivatives activities are reined in, and their cost of borrowing rises as bond investors recognize that too-big-too-fail is over."

Meanwhile, JPMorgan is facing probes from the Securities and Exchange Commission.

Banks are required to disclose any changes made to models that evaluate risks.

"The SEC will be primarily interested in and focused on the appropriateness and completeness of the entity's financial reporting," SEC Chair Mary Schapiro told lawmakers recently, according to Reuters.